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Business Observer Friday, Nov. 7, 2014 4 years ago

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Paradox of politics: Business success makes you a pariah
by: Matt Walsh Editor

It's a puzzling paradox. Americans scowl at career, hack politicians who have done nothing in their adult lives but politics. At the same time, Americans generally have great respect for the competent, successful business people in their communities, and they pine for those traits in their elected representatives.

And yet, in politics, a candidate who has achieved business success and earned wealth is often viewed as the equivalent of Ebola. He's diseased. A pariah. Held in vicious contempt — regardless of his rational, competent behavior.

We won't even go down the path of how Rick Scott has been portrayed. Suffice it to say, and we do so knowing the whole story, the mainstream media have conveniently not investigated or told the other side of the Rick Scott business story (there are always two sides, you know).

Instead of Scott's story, though, let's consider that of Republican David Perdue, who ran against Democrat Michelle Nunn in Georgia for the U.S. Senate.

Nunn jackhammered Perdue, a successful entrepreneur for “outsourcing” jobs to foreign employees.

During the weekend before the election, Nunn said: “When I think about this race, I think about a real contrast that we have, and it is between someone who spent their life right here in Georgia for 26 years mobilizing volunteers and building communities and someone who, by their own words, has spent their career, the majority of it, outsourcing jobs.”

There it is: Another community organizer versus the evil “outsourcer.” How dare he be so un-American?

Rarely does anyone tell the rational story behind outsourcing. It's certainly too complicated for TV sound bites.

Here it is:

1) Outsourcing more often than not helps America's poor and middle class have a better standard of living.

2) Politicians are to blame for almost all outsourcing.

On the former: Take the CEO of virtually any manufacturing company. He has a fiduciary obligation to increase shareholder value. A CEO can do that by increasing the profitability of his company. And the most effective way to do that is to produce at the lowest, most efficient cost, which makes the company's products or services more affordable so more people can and will buy those products and services versus those of a higher-cost competitor.

So the math for this CEO is simple: Pay $4 an hour to make a widget in Bangladesh, or $20 an hour in the United States?

If you were a CEO, what would you do?

Consider Perdue. When he “outsourced” manufacturing overseas, he was making a rational, economic decision — making his products and services more affordable and more attractive for the largest number of American consumers possible. A noble, rational strategy and public benefit.

If he didn't outsource and opted to manufacture in the U.S. at higher costs, the consequences would be obvious: His products and services would be less affordable and less competitive, generating fewer sales, making his company less profitable and less valuable for shareholders or making it go out of business altogether. An irrational choice.

But why would Perdue be forced to make that choice to begin with? Globalization is one answer. The spread of capitalism has made the cost of production so much more competitive all over the world.
But here's the main reason: Government regulations have driven the cost of doing business far higher than most places around the world. Start with the corporate tax rate of 35% — highest among developed nations, and go from there. The list is long.

Americans may say all those regulations are good and needed. But such mandates are choices — more regulations for often marginal public good versus more jobs.

David Perdue is no pariah for outsourcing. He is only acting rationally, as every CEO is expected to do.

Hooch and health care
The voting on Amendment 2, the medical marijuana measure, is a long way from the end of the story.

The Legislature will continue to face the question and details on how to handle the subject. Indeed, “Charlotte's Web,” the law passed in the 2014 session, which allows a liquid form of marijuana for certain diseases, was only the beginning.

To be sure, legalized medical marijuana appears destined to become a part of American culture.

But here's one of the issues that rarely, if ever, is discussed: The cost on taxpayers for providing health care to those whose brains and bodies later become ravaged with drug-related diseases. Include tobacco and alcohol use in that same calculation.

In a free society, we should be able to say all drug use should be legalized. Let people make their own choice on what they want to smoke, drink, eat or shoot up — excluding minors.

But here's the catch: Taxpayers should not be saddled with paying for drug, cigarette and alcohol users' health and mental care. Let them pay the consequences for their choices.

That would be a common-sense approach. Here's why: People respond to incentives. If they see there is no cost to bad behavior, you get a lot of it. If the cost is high — death and a lot of pain and suffering, bad behavior would diminish.

That approach (user pays), of course, will never be socially or politically acceptable. Americans have been brainwashed to believe that free health care is a God-given and constitutional right rather than what it really is: a limited resource, like oil, food and water. Caveat emptor. Let the buyer and users beware, not the taxpayers.

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